Bootstrapped Entrepreneur Netting 7 Figures @ 25 - Q&A

I get PM every day or so here asking questions so I figure might as well answer questions publicly to maximize value for the community. Happy to verify if a mod PMs but my post should be pretty telling.

Preface for what it's like starting out.

Keep in mind this is for true entrepreneurship and not some bullshit small business.

* Get ready to essentially burn thousands of hours making very little until you get good. Think of it as an education. I was probably making the equivalent of like $10 an hour for a long time. Even with "good" income purely because of hours worked. If you're in banking you shouldn't have any issue with the hours but you will likely not be particularly big on the idea of working 1000/2500+ hours on an idea before finding out it's worthless.

* For years my daily consisted of taking opiates/gabapentin/etc... with adderall to counteract the sleepiness. This let me cold call 8 - 10 hours a day successfully and then complete the work after that. You probably don't need the drugs but just be ready to live like absolute shit for a while. You don't have to do that but if you want to make real money quickly then you need to go all in and burn everything else. I'm pretty healthy now, workout 2x a day, no drugs other than fun ones, but I also do much less taxing work that I find more enjoyable and less grindy,

* Weird super stressful shit happens frequently. IE I had to give rape counselling to a female employee and I was like...23. I don't know anything about rape or rape counselling. Super weird and not something I really wanted to get weighed down with when I was dealing with the stress of operating a company but that's just part of it. You'll also deal with black swan events both good and bad. Oh and the black swans that are good usually come with some scaling pain. :)

* It's really, really stressful. If you're not stressed out you're not moving fast enough or working hard enough. Eventually you'll find nothing really stresses you out though. I got "lucky" because my chronic pain condition I was diagnosed with at 17 made other things way less stressful. I don't have to deal with it now which has given me a lot to be grateful and also nothing really stresses me out now. People tell me I look relaxed all the time but...it's just because I'm happy I don't feel like someone stabbed me 43 times 24/7 .

Approach to building new companies/core recommendations:

* Make extremely asymmetric bets at first so failure isn't a huge deal and won't bankrupt you. Get GREAT at microtesting. Being able to test ideas without heavy expenditure is a skill that will last you a lifetime and transfers into anything.

* Do not build a product you want but do build a product that solves your problems if they are big enough and are actually problems other people have. It's VERY easy to conduct basic research/polls for free using forums/reddit/etc...

* Use preorders and partner with big influencers if you're short cash. This is what I did. Took a fuck ton of cold emails but...it works. If you're posting here, you're probably smart enough to write a good cold email. Look up copywriting basics before you do it.

* Focus on building beautiful scalable systems with low capex. Capex can come later once your idea is proven. IE starting a physical store is a shit idea because you're locked into a lease. Manufacturing yourself is a shitty idea because you're dumping cash into equipment before you prove out demand. This is also because I think like a marketer so YMMV.

* If you don't have huge amounts of cash don't play the pricing game. I never price "competitively" because a big boy could wipe me out overnight due to their war chest being bigger and their sheer size overall. IMO it's better to have an amazing brand with a reputation for quality and price at a premium. Suit Supply can't just offer a $10,000 suit and knock isaia out of business, can they? :) Brands create huge EV as well.

* Optimize for profitability and not scale unless you're in tech. Fuck selling equity. Companies in eComm/D2C are largely sold on EBITDA multiples unless you are MASSIVE. Plus you want that cash flow ASAP as you can reinvest it and reap the power of your money compounding.

* Exits are overrated. Where are you going to invest that cash anyways if you don't have solid deal flow or the knowledge to invest it correctly anyways? Most entrepreneurs fucking suck at that and burn their cash on shitty deals after an exit and end up working for a PE fund as an operator, which is cool and all, but you're an entrepreneur to avoid working for others so.... My approach = exit if I get offering an amazing multiple or see a better opp but in the interim I'm happy to buy, create and hold great companies and then use the cash flow to invest and get better and better at that. Wealth management is an underrated skill and hiring wealth managers is a pretty shitty idea. They're not rich for a reason and GS will just rape you anyways.

* As soon as you have the revenue requirements passed, join EO/YPO. Expensive but great networking opportunities and I've met some awesome people through it.

Background:

* Ended up with only an 82/85% avg in hs because my last year I ran into severe health problems. By severe I mean a condition bad enough to get scripts for as many painkillers as I wanted so I ended up at an OKish school. Well respected in Canada but IMO not really worth going to schools without amazing networks or full of legitimately talented A-players like you find @ targets.

* Hated uni because it was full of retards and was making me more than some of my profs flipping shit on eBay/CL. I was working 80+ hours at this point. Had jobs in sales/etc... too.

* Built a large online community when FB organic reach was amazing and used that to...flip stuff faster!

* Leveraged the community to move healthy chunks of custom inventory for retailers and collected a commission. Essentially acting as an affiliate. This is where I made most of my seed cash.

* Eliminated the middle man and launched our own retail op. Retail op ended up with much lower op margins than I expected. Around 15% or so. Even though we did $1M+ our first year with like $20k into it, it wasn't really worth it because we only paid ourselves like $50k each for 100+ hour work weeks for a year. It also did't scale cleanly. At the same time I was trying my hand at various businesses prior/during the above. One took off I was just VP/consultant.

* Started an offshoot of the main retail op that did really well. Like 15k in and $500k+ in EBITDA first year and tracking $1M+ EBITDA second year.

* Started investing in various consumer brands and eComm retailers where I can add value. This allows me to buy in dirt cheap because of operating experience. Typical deals look like a royalty on revenue + salary cap on founders + good equity chunks for me. I invest PE style and not like an angel/VC as PE style returns are way way way better in my size range + cash flow is immediate so I can reinvest super fast. Even if the operators are shit I make my money back in under 6 - 15 months because of the royalty and the salary cap on operators. Largest co will do $10M+.

I also sometimes start companies and throw $25k - $75k at starting them if I find good talent and we have an idea we want to test/launch. IE I have a supplement co. we are about to do this with ATM.

Day to day:

* I could stop working if I wanted to but I'd get super bored. Absolutely love working with smart people in a variety of fields and industries all day. The other day I talked to an ex-data scientist from Uber about leveraging her knowledge to optimize product sorting/merchandising for one of our larger retail ops and then an iBanker about organizing a small divi recap for one of our companies, which requires creativity because you don't usually see divi recaps on companies with under $5M EBITDA. Usually I put in 80 - 100 hour weeks.

* Daily work looks like calls in the morning for the company I still operate day-to-day (sort of?). I'm not big on operating although this company is growing too fast to risk handing to someone greener than me so I do it. It still only works out to 5 -15 hours a week. More during product launches/rehauling core systems. IE if marketing needs to be audited and double checked for efficacy then I'm the one doing it.

* Been spending most of my time building channels for deal flow and talking to/meeting operators. This has been immensely useful to me as it's given me perspective you can't get anywhere else on how different business models function and work. Plus anything I really like about a business I take and integrate into my portfolio companies.

* Spend time a few times a week helping operators in my portfolio with their various issues. One company needed debt quickly for inventory so I helped them raise $250k in PIK bonds overnight from other companies and friends.

* Working on a strategy to start buying up bigger companies. Starting a fund makes no sense because the math doesn't work out in terms of returns for myself.